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tv   Worldwide Exchange  CNBC  September 1, 2015 5:00am-6:01am EDT

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weak chinese data sending global equity markets lower. manufacturing pmi weighed heavily on the nikkei which ended the session near a six month low. >> in europe the dax is down by as much as 3%. state t stateside it's called to open lower after suffering the worst month since 2010. >> negative sentiment being felt in commodities. wti and brent back on the slide after the best three day winning streak in a quarter of a
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century. >> the original copy. apple is talking to hollywood executives about creating it's own shows in a bid to compete with netflix. this after announcing a tie up with cisco. now it was the worst month for the s&p since may of 2012. the dow since may 2010 and the biggest gain for the volatility index back to 1990 and as you can see that volatility may continue into september. we're now looking at the dow jones industrial in premarket trade down nearly 400 points. a big move. the s&p 500 down about 49 and the nasdaq down about 113. this as oil prices continue to move lower after that big rally that we saw over the past three trading sessions. want to point your attention to what's happening here in europe in the month of august. european stocks suffering the
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biggest loss since august 2010 and here in september we're starting the month off on a down note. we're looking at the xetra dax seen as the power house down about 300 points. we got the disappointing data from asia. telling economists that people's bank of china will devalue their currency in the coming weeks. that is not good from the exporter. that's one of the reasons we're look agent the german index underperforming the european averages but significant moves with the french equity market down 2.7% and the ftse 100 opening down by 10.9%. all down about 3.4% in today's trade. >> let's look at commodities because oil prices kicked off september in similar fashion to european stocks but these declines here up just less than 4%. we need to put in perspective because the late end of august
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rally that we saw in oil prices was he enormous. some 27% over the final three trading sessions in august for wti. so much so they ended in positive territory: so yes we're down sharply, down 3.74% but it comes off of the back of the final three trading days of the month. let's look at forex. it is a risk off day as we have shown you in oil markets and equity markets yet we're seeing the euro and the yen rally. the yen up 1.2% to 119.7. why is that? this risk off moment once again pushes back expectations of when we'll see a fed rate hike and clearly in the main currency pairs some people already priced that in. so we're seeing the u.s. dollar slip a little bit. final look at bonds, despite
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that people are pushing back their expectations we're still 1.6% on the u.s. ten year so we haven't seen too much bond buying today on the back of this risk off sentiment. >> wilf, china concerns weighing on asia market with the nikkei closing down almost 4%. weak spending data adding to the negative sentiment in japan. the shanghai composite ending in the red after shedding 12.5% in august. overnight we saw the manufacturing sector shrink at the fastest rate in three years. it dropped to 49.7 in august. the first sub-50 reading since february and china services sector posting a fall from july to 53.4 and if you take a look at chinese and asian markets the big question is will we actually see a turnaround? a series of steps taken by the central bank to kick start the economy and bring back growth.
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but we haven't seen it through to the real economy. this data suggesting that more pain to come. >> absolutely. we do expect more easing but we already know that that easing is having less and less effect. i point to the lending number which is have been stagnant. we'll see more cuts or we expect more cuts and as chief em economist told us this morning, the pboc is now running just to stand still and when things are slipping, when confidence is low, of course these cuts have much less effect and that's really the longer term problem china faces now. >> there's also a wider question as to what else the central bank can do to stem the decline in the markets and help the economy. do they have anything else left in their tool box? we have been seeing them use unconventional monetary easing but what else can they do? that will be interesting to see if they can continue to allow their currency to weaken. not a good sign for the exporters. perhaps a reason we're seeing
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the big export stocks underperform in today's trade. >> the big unused tool they haven't put into play over the last year or so is the fiscal policy side but their long-term aim is to shift the economy more from investment and state-lead to consumer lead and that's a big negative for the long-term. so that's really the problem they face. they could cut rate hugely down to zero. but why do they want to stem more serious amounts of lend something and that's the longer term issue although the shorter term reaction to the stock market move perhaps needs to be highlighted that in the last 18 months it wasn't correlated to the economy so the fact that it's coming down doesn't mean the market is going to come down with it. >> reacting to the data verses the volatility. >> exactly. >> the pboc tries to control the
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market swings from october 15th. banks in china trading for clients will have to hold 20% in u.s. dollar reserves. >> shares in british hedge fund man group are trading lower. this following a report that the head of the china unit is being detained in beijing as part of a wider probe into the volatility. but according to the financial times her husband denied the claim saying she has not been taken into custody. regardless man group shares down 5.6%. meanwhile a reporter for the local business magazine apologized on state television for his report which is he described as having caused panic and disorder. >> china's central bank is to set up a $10 billion investment fund in latin america. it will be invested in numerous areas including manufacturing, tech, agriculture and energy. i find that's kind of interesting. they're injecting more liquidity
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into their own economy and market. at the same time they're looking for other growth opportunities outside of china. >> they continue their attempts to get their hands on various resources and growth markets and so they should of course. they have got reserves in those areas as well. now moody's has released a report that says that most chinese companies can with stand a 10% weakening of the rmb. moody's analyzed several nonprofit companies saying they had a sufficient push to deal with devaluations. they believe it would provide some benefits for some companies and only a hand full would come under downward rating pressure. oil is giving back some of yesterday's gains a mid the weak china pmi reading and as investors take profits. this after they surged over 8% yesterday overcoming a 20% loss in august to close out in positive territory.
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it comes after opec said it was open to talks with other producers over price worries. data showed the u.s. production was lower than previously forecast. >> now citi says the crude rally will be short lived saying recent gains are not warranted by fundamentals. they're expecting to make fresh lows before year end. meanwhile, the world is still oversupplied with oil though it forecasts the decline in u.s. production last year. that rally where we saw crude gain about 27% not based on fundamental which is many can say is true. it's more speck atechnicals drie price action right now. >> there was some short covering and the like and obviously following that we've seen some profit taking today but the oil market has been extraordinary over the last year or so. not only is it a proxy on risk sentiment globally and when we see equities move or gdp data
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disappoint but there's so many other factors going on and that story relating to opec being open to talk to other producers i think is a fascinating one and maybe that will happen. that's clearly something to do with the rally but i think i'm skeptical of it happening. >> the other question is saudi arab arabia, will they shrink the global glut? and a dramatic move here on tuesday we're looking at wti crude lower by 3%. one of the reasons we're looking at energy stocks here in europe underperform. >> meanwhile, steven cohen raised stake in sunedison. point72 has a 5.1% stake in the company. he also disclosed he bought more shares last week. sunedison down about 70% from the peak in july. shares rose in about 3% in after
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hours trade. here on tuesday down about 4.3% in frankfurt. well, is stick around because coming up on worldwide exchange, time to give europe some credit. our next guest says the em slow down has made the block a relative safe haven in the corporate credit market. find out why, next. don't go away.
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welcome back. weak china data sends markets lower. futures pointing to a triple digit loss for the dow. crude resumes it's slide following the best streak in 25 years and apple goes to hollywood as they discuss creating original content. >> let's get you a run down of what to watch this trading day. the manufacturing index is out at 10:00 a.m. eastern. it is expected to have held steady with the previous month. also at 10:00 a.m. live construction spending which is expected to have picked up after posting the smallest increase in six months in the month of june. boston fed president speaks about the economy this afternoon and we do have some earnings from discount retailer dollar tree reporting before the bell. h and r block out after the close. >> auto makers report the august u.s. sales number today.
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the headline may show sales are down from a year ago but that's due to the calendar as the labor day holiday falls later this year. the annual sales rate is expected to remain above 17 million on continued strong demand for suvs and pick ups. sales are shaping up for the best year since 2000. >> with worries over greece on the back burner for now, is it a good time to point your portfolio in europe's direction? that's the view from our next guest that says the slow down makes europe a relative corporate safe haven. paul waters head of corporate research at standard and pores here in the studio. a pleasure to have you on the show. help us understand why corporate credit looks more attractive here in europe and the u.s. perhaps. >> the argument is on a regular basis europe has gone over the crisis in greece. whether greece would stay in the euro or not. the focus has shifted to china
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and obviously the fed move and when they might start hiking rates in the u.s. so on that basis, the european economy is actually starting to look reasonably strong. it's sort of gradually improving very much supported by the initial action that have been taken. not the least the ecb's qe policy. that really helps the domestic economy. obviously the multinationals very exposed to emerging markets in china will experience headwinds but actually the european economy looks reasonably okay. >> how much is it to be long corporate credit in europe. a relative core because government debt is so low because of qe. how much is it that the companies are strong and growing and whatever yields are
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available that's an attractive buy? >> obviously what you have been seeing is that there's been a chase for yield so they have been getting financing cheaply. those investors might be more alt risk if the risk off trade continues but from a fundamental credit perspective where you're talk about cash flow, actually, these companies certainly investment grade companies and stronger credits look reasonably okay from our perspective. >> credit spreads widen last week on the risk aversion fears. i want to draw your attention to u.s. futures pointing to a significant move lower. the dow is called to move lower by over 400 points. do you think that will be more attractive as we see volatility rise in september? >> we have to separate market
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risk from credit risk. but the question is does that fundamentally translate into deterioration of credit and while we think that there are vulnerabilities in the space for credits, many other companies that have stronger credit characteristics or operate in more stable sectors will weather the storm quite well we think. >> i want to bring it back to europe and where the qe is working here. some has picked up quite nicely and that made some of the equities and corporate credit look attractive. what about longer term effects. have we seen capex pick up from economies? is this going to have a lasting effect? >> that's been the missing link in terms of the sustainability of the recovery and we've done a lot of research on capex
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globally and it's been a strong headwind by virtue of the fact that it's from the energy and commodity sectors. from here looking into europe for the next year there's quite positive news actually because excluding commodities we're expecting an 8% increase in capital investment for companies across a broad range of sectors. that's the first time we've seen a positive move there for quite awhile. that's a positive support to the growth story. >> just to sum things up we touched on it and it's ever presence in our minds is that a risk or only will be market risk as opposed to credit risk. >> there's a potential for contagion there but a lot of what we're seeing at the moment is investors and traders trying to understand how the global
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patterns of trade will shift because we're sort of move agoway from such a focus on the growth to a stronger more sustainable credit market. if you're a premium auto producer, a bmw or audi selling to china or selling out of china even obviously for the short-term at least you're going to be suffering a negative impact on earnings. >> thank you for joining us. head of corporate research at standard and pores. the u.s. state department released the largest batch of e-mails yet from when hillary clinton was secretary of state. among the 7,000 pages are more than 150 e-mails that have been redacted for information that is now classified. they include complaints by clinton staffers about restrictions on the use of e-mails to discuss sensitive
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diplomatic issue. >> president obama called on world leaders to work together to tackle climate change. speaking at the conference in alaska on monday he outlined the need to build a new green economy. >> this is not simply a danger to be avoided. this is an opportunity to be seized but we have to keep going. we're making a difference but we have to keep going. we're not moving fast enough. if we were to abandon our course of action. if we stop trying to build a clean energy economy and if we do nothing to keep glazers from melting faster and oceans from rising faster and forests from burning faster and storms from growing stronger we will condemn our children to a planet beyond their capacity to repair. >> what else can we expect? well tracy pots is joining us live from washington. >> good morning, you can expect him to show what he was talking
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about this. you heard the president talking about glacers melting. today we'll see him hiking up to one of the glaciers and taking a boat to part of a program that will air later but as part of this trip, his aim is to show that climate change is real. that the glaciers amelting at a very fast pace raising sea levels. there's an island right off alaska that scientists say will be completely submerged in water in about ten years so the president is trying to make the case that this is urgent and he's doing so because in a few months in december his administration will sit down with world leaders in paris. they are trying to workout a global agreement. there was the big agreement with china which some said was more on the u.s. side than china side and now global leaders will sit down and try to workout a global
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climate change agreement so this is leading up to that. >> thank you so much. coming up we're going to discuss more about the market turmoil and what to expect in september. it was an august to forget for two major hedge fund titans. that story coming up. [ male an] we know they're out there. you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future. at boeing, that's what building something better is all about. ♪
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august was a tough month for two hedgefund moguls in particular. both flag ship funds were down 5% for the month. sources say einhorn's green light capital fell 5.3% bringing the firm's losses for the year to 13.8%. loeb's fund dropping 5.2% but still up for the year. they're typically the first big hedge fund managers to tally monthly results suggesting others could also report heavy losses. >> it was an august to forget. a lot of volatility now on the first trading day of the month we're asking do you think it will be a september to remember? what are you expecting? we've been getting your tweets over the past hour. he is expecting the s&p and dow to test new lows this month. some of the other people on twitter, wilf, they were saying they're going to stick to the sidelines and wait for the fed meeting which could give us more clarity as to whether we're going to be living in a higher
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rate environment. >> that's a fair point. it's going to be hard to see a meaningful rally ahead of that meeting, particularly for u.s. equities although i would have thought we would have seen a bit of stability following the end of last week and at the molt u.s. futures pointing to the fact that that's not a case. we'll have another sharp decline today. >> one thing that could really change this picture is that jobless report. that jobs number on friday that will give us a better indication as to whether the u.s. labor market is improving. we'll keep an eye on that friday job's report. meanwhile the futures are pointing to a lower open. the dow down about 377 points and give us your tweets and join the conversation here on how you're positioning yourself. >> let's move on. flashes coming out of the russian deputy prime minister. he says russia is ready to discuss oil price stabilization with opec.
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that's quite a big development of course. it's long been a possibility. they're getting together to help stabilize the price and we did see 3.8% of declines earlier today and now down only 3%. perhaps that's linked to the flash. russia ready to discuss oil price stabilization with opec. tsa been reported from the russian deputy prime minister. >> coming up on worldwide exchange. why dollar tree is stock you should buy ahead of the earnings report. we'll bring that analyst into the discussion. plus let's take a look at u.s. futures as we head to break. the dow indicating a lower open by 386 points. this as oil prices move lower. we're back in two minutes. this just in: 50 million customers' data was not compromised this morning in a security breach that didn't happen.
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took a lot of juggling to keep it all together. what's possible when you have high-speed internet at home? the library never closes. it makes it so much better to do homework when you're at home. internet essentials from comcast. helping to bridge the digital divide. welcome to september everyone. you're watching worldwide exchange. >> i'm wilfred frost. here are your headlines from around the world. >> weak chinese data sending global equity markets lower. weighing heavily on the japanese nikkei which ended the session near a six month low. >> in europe, all major indices are off more than 2%. stateside the dow is called to open lower by triple digits after suffering it's worst month
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since 2010. >> the negative sentiment from china also being felt in commodities. wti and brent back on the slide after their best three-day winning streak in a quarter of a century. >> the original copy. apple is talking to hollywood executives about creating it's own shows in a bid to complete with netflix. this after announcing a tie up with cisco. >> welcome to worldwide exchange everyone. mixed messages coupled with worries over global growth is keeping investors on edge plus the disappointing read on manufacturing in china. the dow down 394 points in premarket trade and the s&p 500 here on september 1st of 2015 lower by around 50 points concerns weighing on investment
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sentiment here. let's take a look at how asian markets ended. the shanghai composite after losing 12.5% in the month of august losing about 1.3% in today's trade and the hang seng index trading lower and losing 3.8%. so this disappointing data out of china continues to weigh on global markets. here in europe the exporters that rely heavily on chinese demand are selling off in today's trade, the german dax down nearly 3%. the cac 40 down 3.9% and the ftse 100, they continue to underperform given the volatility in the commodity market. the ftse 10 trading lower by 2.6%. let's get a look at commodities. that's a big part of the story. interesting correlations with stock prices. european stocks have moved lower
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today. wti crude after seeing the best three-day gain in many years. lower by around 3%. brent crude at $52.56 down about 2.9%. a quick look at gold given the rise in volatility. gold has been seeing a bit of buying in the month of august and that continues into september higher by around $7 in today's trade. so how do you make money in these markets? here's what a series of investors have been telling us this morning. >> somebody asked me the other day what i was doing last week and i said i was out there buying stocks and buying in the case of singapore real estate investment trusts. some of these trusts are offering 6, 7, if not more in terms of dividend yields and i just think that interest rates are going to remain low for a long time and if somebody wants to pay me 7% for owning their stock i'll take that any day. >> we take a 6 or 12 month view.
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we think you'll see pretty good progress in equity markets and over that horizon we'd see the best returns in europe and japan. that's where the valuations are most supportive and where you have a reasonable improvement in profitability and i think people should be looking to accumulate volatility and weakness in the near term. >> i would buy things like dividends that underperformed year to date and the yield is 6.3% at the moment. you can't laugh that. that's a good solid yield. it's above the 30 year average. they are back today. we run an index of cyclicals over defenses. that's back today at the absolute floor at any point during the crisis. >> all right. let's talk about earnings. dollar tree reports q-2 earnings before the bell and investors will be looking for any addition they may have made in the final month. analysts estimate earnings of 68 cents a share. that's an increase of 11%.
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shares have done well over the past 12 months. a big outperformer. over 40%. can the stock continue to rip higher? patrick is joining us this morning. good morning to you. what are you expecting from dollar tree? >> good morning seema. well, i'm looking for solid growth in the quarter. the street is a little bit below my estimate. i wouldn't be surprise first degree the number comes in closer to the street number. we heard from dollar general last week and that's a good peer to dollar tree and they came in light with same store sales for the second quarter but that will be the big focus along with anything they say around the family dollar acquisition which they're just a month into it. they closed that acquisition a little bit more than a month ago. >> let's talk about expanding
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stores. 93 stores in the first quarter. sounds like a lot in this environment s. that the right sort of number that they should be expanding at the present rate? do you think that will continue? >> i think it is. these stores are small and they draw from a pretty small trade area. same thing with family dollar and dollar general. they're growing by 6 to 7% annually. we think they can sustain that number. dollar general is planning to add 900 stores next year in fiscal year '16 so they're huge numbers. 25,000 plus dollar stores out there among the three big guys, three big players but there's plenty of growth opportunity. one of the things we look at closely is new store product activity and it continues to track very nicely for the dollar
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stores overall with dollar general right around 85%. dollar tree is north of 70%. those are good numbers and they suggest that there's plenty of runway for additional growth. >> patrick, gas prices in august tumbled to a three month low. how much is that helping the consumer that typically shops at dollar tree? >> it's a pulse for the core dollar store customer that spends more of their disposal income on energy so that's where we're seeing it right now. it's in the dollar store space with the lower end, if you will, concepts because of the core customer demographic. we're not really seeing it much elsewhere. if you look at the department stores, even the big boxes there hasn't been a lot of flow
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through but i think one area we are seeing it is in the dollar store space. >> sum it up for us. what's your price target for the stock? >> $88 is my price target. using a 20 multiple off of my eps estimate of $4.40. that's for the combined company. so there's still upside. it's been a good name but i think the stock can continue to move higher. >> the managing director and senior equity manager. >> let's take a look at the top stories at this hour. the u.s. state department released the largest batch of e-mails yet from when hillary clinton was secretary of state. among the pages are more than 150 e-mails redacted for information that's now classified. they include complaints about restrictions on the use of e-mails to discuss sensitive
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diplomatic issues. >> the white house is reportedly considering sanctions against russian and chinese individuals and companies for cyberattacks on u.s. commercial interests. reuters says no final decision has been made. the washington post first reported the u.s. was considering sanctions on chinese groups. sanctions could further strain relations with russia and cast a shadow over the state visit this month. >> still to come on the show. getting down to business, apple and cisco are teaming up to get more ipads and iphones into the office. details after the break. arthrit, so you don't have to stop. tylenol® 8hr arthritis pain has two layers of pain relief. the first is fast. the second lasts all day. we give you your day back. what you do with it is up to you. tylenol®.
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and you can eat even tough food. fixodent. strong more like natural teeth. fixodent and forget it. welcome back. it was a tremendous month for stocks and commodities. the rise in volatility and concerns over global growth helped gold rally. up about 3.4% in august for its best monthly gain since january when gold gained about 8%. now the weakness in china and a stronger dollar, though, sending oil lower. wti hitting it's lowest level in six years but then overcoming an almost 20% loss for the month to close positive in august. so a dramatic reversal in the oil patch and a similar story for brent now trading at $52.75.
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you can see in today's trade here on the first of september we're lower by 2.5%. lower oil prices pushing gas prices lower. tumbling to the lowest level in three months. the commodity levels having a big impact as well. >> do you know what's also been volatile? >> what is that? >> apple. >> apple stock has been volatile but with a new partnership out tim cook will hope to put it to that volatile a and for details let's get out to landon at cnbchq. >> good morning. the partnership between apple and sis coe is aimed at helping the iphone and ipad work more effectively on corporate networks where cisco's gear is widely used. financial terms of the alliance haven't been disclosed. business internet collections will be able to deliver content quickly and securely to am
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devices. sis c cisco will help it interact smoothly with office phones. it's trying to expand it's foothold as share verss have fa for the fifth straight quarters. they talked about the partnerships at a meeting in las vegas. >> the deviet ce is very import. the apps are very important and the network is very important. but in reality each of those can be great by itself or even each can be great in total but it's do they work together seamlessly? and that's what this is about. and i couldn't be more excited about it. >> this is the second time in two years apple has teamed up with a major tech company that focuses on business customers. it joined forces with ibm last year to build and sell business
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apps for the iphone and ipad. both are down more than 4% today. apple may also be looking to move in on netflix's territory. variety reports the company has held talk with hollywood executives about possibly creating original programming. apple is expected to unveil the new version of its apple tv device next week. they are leading the charge. it's unclear whether apple will open it's own studio or work with outside producers. variety says apple made a large offer to secure the former host of top gear for a show but was outed by by amazon. he'll be making a pretty penny of $15 million a year. not too bad. >> not too bad at all. i did like that story but he's obviously gone to amazon instead. thank you very much. >> moving on, a group of china based entrepreneurs and financial investors are plowing funds into efforts to develop nextev. a new challenger to tesla.
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backers include chinese internet company and hillhouse capital. efforts are supported by the chinese government that encouraged investment in electric cars by nonautomotive companies. >> spaceex says it's falcon 9 rocket will be grounded for a few more months than planned. the company which is owned by elon musk previously said the next flight would be no earlier than september. spacex believes the accident was caused by a metal support strut in the rocket's engine that broke off shortly after takeoff. >> marissa mayer is expecting twins. they made the announcement through a yahoo! blog post. the company is happy about the news and supportive of her plans. she's due to give birth in december. this comes at a busy time for the tech boss as the firm
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prepares to sell it's stake in yahoo! japan as well as spin off it's shares in alibaba. >> let's remind you of the headlines. weak china data sends global markets lower. futures pointing to a triple digit loss for the dow. crude resumes it's slide following the best three day streak in 20 years and a tough month for hedge funds as the flag ship assets were down 5% in august. worldwide exchange back in two. k from bank of america to buy a new gym bag. before earning 1% cash back everywhere, every time and 2% back at the grocery store. even before he got 3% back on gas. kenny used his bankamericard cash rewards credit card to join the wednesday night league. because he loves to play hoops. not jump through them. that's the excitement of rewarding connections. apply online or at a bank of america near you.
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now big declines in august for global equity markets. september started very weakly indeed by performance in asia this morning. most of this decline stemming from disappointing pmi data out of china. marly the services pmi now
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disappointing like the manufacturing pmi has been for sometime. that's weighed across the board. the shanghai composite down 1.3%. the nikkei bearing the brunt of the declines this morning. japan down 3.8%. don't forget the likes of the dax finished august down some 10% but falling a further 2.7% as things stand so far this morning. we have had pmi's out of europe as well. those however were in line with expectation. >> let's get you a rundown of what to watch this trading day. the august ism manufacturing index is out at 10:00 a.m. eastern. the pace of activity is expected to have held steady with the previous month. also we get july construction spending which is expected to have picked up after the smallest increase in june. eric rosengren speaks about the economy at dollar tree and h and r block report earnings. u.s. futures report a lower
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open. the dow is calling for a lower open and nasdaq off by 98 and s&p 500 lower by 43 points. august was a tough month for hedge fund moguls. both were down 5% for the month. sources say green light capital fell 5.3% bringing the $12 billion firm's losses for the year to 13.8%. loeb's fund dropping 5.2% but still up for the year. now loeb and einhorn are the first to tally monthly results suggesting others could also report heavy losses. >> i wonder if either of those two were long china during the month of august because if they had they will have suffered. the shanghai composite finished august down some 12% and of course it has opened september down as well. further 1.3% as i just told you. the hong kong index, how did that perform over the month of
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all? it's coming for us now down a little bit more. the recent sell off is lead by the china a share market but the hong kong market caught up as well a little bit in august. it was down 12.3%. it's down 3.7% today. >> it is the weakness in china and the volatility in asian marketing casting a dark shadow over u.s. markets. the dow losing about 6.6%. the worst month since may of 2012 and look at the s&p 500. it was a down month despite the rally we saw toward the end of the month. down a similar amount by 6.2%. the the nasdaq t worst month since 2010.
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losing a similar amount by around 6%. let's bring in our guest from chicago. senior vice president of derivatives joining us here. what are you expecting on the first day of september? futures are pointing to a significant move to the downside. >> well, you know, it's going to be more of the same. now i think china has been a big part of the story but it's been a darker part of an already dark story here in the u.s. and the question i have been asking for the month of august and i haven't got an answer yet is we're in our 7th year of emergency level 0% interest rates here in the states and we can't get any inflation. we have federal reserve governors going around giving mixed signals to the market which also has investors nervous. we did have a descent gdp last week but it was lead by record levels of inventory and the atlanta fed is projecting 1.4 or 1.2% so we have a dark picture here in the state which is
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brings to mind how anybody can have a serious conversation about how the fed can actually raise rates. i think that they could but absolutely don't think they should but that's my opinion versus theirs and we'll see what they have to do for the rest of the month but it's all going to hinge on this friday's job number. over the last 20 years china has been growing by 56 times. there's no way you can have a soft landing slow down in china. there's going to be a thud there and that's part of the reason why you've seen the markets take a turn. >> what is the u.s. market reacting to the most? expectations of a rate rise or the risk off fear stemming at the moment? does it become irrelevant during the current climate? >> the political answer to that question is this, the u.s. markets are reacting to we have a basic underlying weakness here in the states and they're worried about that. we had that going in before china started to kick off. so a third of it will be the
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u.s. and the other third is going to be china and the last third is this rate hike rhetoric. could you imagine a ceo saying this is what we're going to be doing but then having every other regional manager there in the press saying one thing? that's been a big problem too. those three things are equal. >> strongest three-day rally in oil. do you believe in the rally or do you think this is a head fake? >> i believe it's just a head fake. if china is between 30 and 40% of global gdp and they're slowing like i think they're slowing, that's going to lead to a global slow down and some are saying global recession. i won't go there quite yet but that's going to effect us here in the states as well. i'm not buying it. the supply and demand situation doesn't change and oil will slowly but surely grind lower. >> thank you for joining us here today. that's all we have time for here today on worldwide exchange. thanks for watching.
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september already off to a rough start yesterday following the dow's worst month in five years and now asian stocks slammed overnight on tough economic data out of china. european shares are down sharply now and u.s. stock futures are pointing to a big drop. if you haven't seen it when wall street opens at 9:30. plus follow the money. new information on how hedge fund managers performed during the recent market. and taking a page out of a hollywood script. watch out netflix and amazon.
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reports say apple may be preparing to move into original video content. it's tuesday september 1st, 2015. squawk box begins right now. ♪ >> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box here on cnbc. becky and andrew are off today. if you're just waking up this morning, buckle up. markets are looking to be in for another rough ride. us equity futures down sharply, triple the losses that we saw even in yesterday's future's market. the dow has an implied open, negative 353 points. that's a pretty stunning number to see.


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